The European Central Bank agreed on Thursday to launch a new and potentially unlimited bond-buying program to lower struggling euro zone countries' borrowing costs and draw a line under the debt crisis.
Seeking to back up his July pledge to do whatever it takes to preserve the euro, ECB President Mario Draghi said the new plan, aimed at the secondary market, would address bond market distortions and "unfounded" fears of investors about the survival of the euro.
Rumors Galore: Market Has Trouble Holding The Positive Side
The market is still holding onto gains sourced from ECB President Mario Draghi comments. But how long can the SP500 divergence from the real economy last.
ECB Draghi comments.
Wall Street Week Ahead: S&P to fly after wild ride to Wyoming
The streak is over, but is the trend intact?
A six-week string of gains in the S&P 500 (^GSPC) ended on Friday amid shifting expectations for central bank stimulus. This week could bring clarity on that issue, and that could determine whether the recent rally that took the index to four-year highs will persist.
What a difference one week makes! On Thursday's blog post my title was, "what a difference a day makes". In the headline driven market we find ourselves where fundamental and technical analysis count for little, the impending deflationary death spiral we were confronting early in the week melted away with one comment from ECB President Mario Draghi: "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough." That last sentence sent global risk assets skyrocketing into the weekend.
Global markets rallied today on news that ECB President Mario Draghi stated that the ECB will do everything it can to bolster periphery credit markets. The street took the statement with a fair amount of skepticism but I didn't. Draghi is no EU bureaucrat from Brussels. He's a man of character who means what he says and he won't be bullied; especially by the Germans. The two LTRO's (Long Term Refinancing Operations) he implemented as ECB President prove my thesis. The Germans were not pleased with these operations yet he moved forward with them nonetheless.
Growth Slowdown Seen for Third Year in U.S. Dodging a Recession
The U.S. economy looks set to deliver a repeat performance in 2012: for the third straight year, it may suffer a swoon yet not slip into a recession.
"I don't think the slowdown will be any more consequential than the past two years," said John Ryding, a former Federal Reserve researcher who is chief economist at RDQ Economics LLC in New York. "There are positives out there in the economy. We'll avoid a recession."
(ECB, GBLHF, ESSA, HBNK) Featured Stock by Stock-PR.com
How many European bankers does it take to change a light bulb? That's a joke in search of an answer, but EWI's European analyst Brian Whitmer explained five months ago that the "light bulb moment" was coming -- that's the time when most people would clearly recognize the severity of the European debt crisis.
How to Profit From Hungary's Downgrade to Junk Status
After having its credit rating lowered to junk status, Hungary is the latest European country to see its borrowing costs climb higher.
The country was downgraded by Moody's Investors Service from Baa3 to Ba1 with a negative outlook a week after it had to ask the International Monetary Fund ("IMF") for help.